LCQ, Inc. is considering selling a 25-year non-callable bond…

LCQ, Inc. is considering selling a 25-year non-callable bond priced at its $1,000–par value with a 7.50% annual coupon, paid semiannually. The company’s marginal tax rate is 35.00%, but Congress is considering a change in the corporate tax rate to 40.00%. By how much would the component cost of debt used to calculate the WACC change if the new tax rate were to be adopted?

The CEO of Harding Media Inc. has asked you to help estimate…

The CEO of Harding Media Inc. has asked you to help estimate its cost of common equity. You have obtained the following data: current dividend, D0 = $0.85; current stock price, P0 = $22.00; and growth rate g = 6.00% (constant). The CEO thinks, however, that the stock price is temporarily depressed, and that it will soon rise to $40.00. Based on the dividend growth model, by how much would the cost of common change if the stock price changes as the CEO expects?

The Victor Rumsfeld Inc.’s dividend policy is under review b…

The Victor Rumsfeld Inc.’s dividend policy is under review by its board. Its projected capital budget is $2,000,000, its target capital structure is 60% debt and 40% equity, and its net income forecast is $600,000. If the company follows a residual dividend policy, how much in total dividends, if any, will it pay out?

A study is conducted to identify the relationship between ex…

A study is conducted to identify the relationship between exposure to farming chemicals and breast cancer. Two groups of women; one with breast cancer and another without breast cancer, provided information about exposure to farming chemicals. The risk of breast cancer related to exposure to farming chemicals was calculated. This is an example of which type of study?